The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the
A)net present value.
B)payback period.
C)internal rate of return.
D)profitability index.
E)discounted cash period.

Question

Quizplus · Accepted Answer

The definition given in the question matches with the payback period. The payback period is the amount of time taken for the cash inflows from an investment to equal the initial cost of the investment. Once this period is over, the investment has recovered its cost and any further cash inflows represent a return on the investment.

The Length of Time Required for an Investment to Generate